How Self-Assessed Taxes Are Processed
You can let a first party self-assess the taxes calculated on the Payables invoices it receives.
A self-assessed tax is a tax calculated and remitted for a transaction, where tax wasn't levied by the supplier but is deemed as due (and therefore needs to be paid by the purchaser). Taxes need to be self-assessed by the purchasing organization when the supplier isn't registered in the ship-to or bill-to location of the transaction
Settings That Affect Self-Assessment of Taxes
Configure your tax setup to automate self-assessment of regular taxes. The following is an overview of the configuration:
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Default registration party: Set the default values for the direct rule type of Tax Registration. For self-assessed taxes set the value to Ship from or Bill from.
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Supplier registration: The supplier can be registered or not registered. Configure your set up as follows:
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If the supplier is registered, the application creates a record with the registration status of registered. The registration of the supplier is considered and the taxes are assessed by supplier and included as a part of the invoice total.
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If the supplier isn't registered, you can either:
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Create a registration record for the tax regime, tax, or tax jurisdiction, with the registration status of not registered.
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Skip the step of defining tax registration and define the tax condition set with the operator of Is blank.
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Selecting first party registration conditionally: Create a registration record for the first party legal reporting unit. For this registration record, select the Set as self-assessment (reverse charge) option.
If the supplier isn't registered, consider the registration of the first party legal reporting unit. To trigger this, define a tax registration rule with the following conditions:
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If the ship-from or bill-from party registration status isn't registered or is blank then the registration party is either the ship-to party or bill-to party. The following is the condition set for the Determine Tax Registration rule:
Determining Factor Type
Class Qualifier
Determining Factor Name
Operator
Condition Value
Registration
Bill-from party
Registration Status
Equal to
Not Registered
Transaction Input Factor
Line Class
Equal to
Standard Invoice
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If you choose the option of not defining a supplier registration then the condition set is as follows:
Determining Factor Type
Class Qualifier
Determining Factor Name
Operator
Condition Value
Registration
Bill-from party
Registration Status
Is blank
Transaction Input Factor
Line Class
Equal to
Standard Invoice
Set the rule result to bill-to party so that the registration of the legal reporting unit is considered.
Tip: Instead of including the condition for the transaction input factor, you can specify the event class constraint at the tax rule header. -
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Self-assessing tax: Check the Set as self-assessment (reverse charge) option for the first party registration record you create for the tax regime, tax, and tax jurisdiction. Once the application selects this registration record for the tax, the tax line is stamped as self-assessed.
How Self-Assessed Taxes Are Processed
Taxes created by the first party organization must be calculated in the context of the transaction. The application creates both summary and detail tax lines for these taxes. The self-assessed option is enabled for these lines. Invoice lines aren't created for taxes. Therefore, the payable to the supplier doesn't include these taxes. Invoice distributions are created to account for the tax expense or recovery and liability.
Self-assessed taxes aren't included in the invoice totals. Instead, the total of self-assessed taxes for the invoice is displayed as a separate line in the tax charges region of the invoice.
Self-assessed taxes are created for imported payables invoices. This happens when imported transactions have tax lines along with transaction lines and if you enable the Perform additional applicability for imported documents option for the event class. For these transactions, additional taxes that are found applicable are treated as self-assessed taxes.
These taxes are accounted along with the rest of the invoice. The accounting treatment for expense and recovery remain the same as any supplier-assessed taxes. The only variation is that the tax amount is credited to the tax liability account instead of the payables account.
Self-assessed taxes are a part of the standard tax reports. Apart from this, Oracle Fusion Subledger Accounting provides reports for accounting activity that can be used to track self-assessed tax liability. Use the Account Analysis Report and the Open Account Balance Listing report to track this liability.
Tax Line Override
You can override the self-assessed indicator for the tax line. This impacts the invoice lines and distributions. If you update the summary tax line, all corresponding detail tax lines are updated to reflect this change. If the self-assessed option on some of the detail tax lines is updated then a new summary tax line is created to group the detail tax lines that are being self-assessed.